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Monday, July 10, 2017

Great Plains Energy and Westar Energy Announce Amended Agreement, Agree to a No-Premium Merger of Equals to Form Leading Electric Utility

KANSAS CITY, MO and TOPEKA, KS --(BUSINESS WIRE)--Westar Energy, Inc. (NYSE: WR) and Great Plains Energy Incorporated
(NYSE: GXP) today announced that both companies’ boards of directors
have unanimously approved a revised transaction that involves no premium
paid or received with respect to either company, no transaction debt, no
exchange of cash, and is a stock-for-stock merger of equals, creating a
company with a combined equity value of approximately $14 billion. The
new, combined company will provide electric utility service to
approximately one million Kansas customers and nearly 600,000 customers
in Missouri. The combined company will have a new name, yet to be
established.

“The logic of combining these two companies is compelling. We are
confident we have addressed the regulatory concerns with our
originally-proposed transaction. We appreciate the Commission welcoming
a different way to combine these two companies, preserving the unique
value available only through this particular business combination,”

said
Mark Ruelle, president and chief executive officer of Westar Energy.

“This merger creates a stronger company for our customers and a much
more valuable company for shareholders, with no additional acquisition
debt, along with sustaining commitments to Topeka and Kansas. It is a
win-win. For our shareholders, it means a large increase in their
dividend. We also expect significant earnings accretion and a larger and
stronger earnings growth platform than we could achieve on our own. The
company and its utilities will continue to have strong investment grade
credit ratings.”

Westar Energy and Great Plains Energy will merge to form a new holding
company, which will operate regulated electric utilities in Kansas and
Missouri. Operating headquarters will be in both Topeka, Kansas, and
Kansas City, Missouri. Corporate headquarters will be in Kansas City,
Missouri.

“We are pleased to announce a revised agreement with Westar Energy that
we believe directly addresses regulatory concerns with our
originally-proposed transaction, while increasing the long-term value
and upside opportunity for our shareholders, customers, communities and
employees,”

said Terry Bassham, chairman, president and chief executive
officer of Great Plains Energy.

“We power our communities – by
generating energy, but also with the jobs we support, the value we
create for shareholders, and the community support we provide. Combining
Great Plains Energy and Westar Energy into one stronger, more
diversified regulated utility has compelling strategic, operational and
financial benefits. Together, we expect to deliver significantly more
value to our shareholders than we can alone.”

Key Terms of the Amended Merger Agreement
Under the terms of the agreement, Westar Energy shareholders will
exchange each share of Westar Energy common stock for a share in the new
holding company. Great Plains Energy shareholders will receive .5981
shares of common stock in the new holding company for each Great Plains
Energy share. The transaction has a total equity value of approximately
$14 billion. It is structured to permit a tax-free exchange of shares.
No transaction debt will be incurred. The exchange ratio reflects the
agreed-upon ownership split between the two companies. Following
completion of the merger, Westar Energy shareholders will own
approximately 52.5 percent and Great Plains Energy shareholders will own
approximately 47.5 percent of the combined company. The agreement
provides that, upon closing, the new holding company expects to set its
initial common dividend at a level which maintains the current dividend
for Great Plains Energy shareholders. This will result in approximately
a 15 percent dividend increase for Westar Energy shareholders.
In connection with the agreement, Great Plains Energy will redeem all of
the previously issued debt and convertible preferred stock it issued in
contemplation of the previous plan to acquire Westar Energy. Due to the
revised nature of this transaction, Great Plains Energy and the Ontario
Municipal Employees Retirement System (OMERS) have agreed to terminate
their preferred convertible equity commitment. After these financial
transactions are completed, the companies anticipate that Great Plains
Energy will have not less than $1.25 billion in cash on its balance
sheet. After the closing of the merger, the combined company anticipates
repurchasing common stock to return excess cash to shareholders and
maintain a balanced consolidated capital structure.
Leadership
Upon closing, Ruelle will become the non-executive chairman of the new
company board. Bassham will serve as president and chief executive
officer of the new company and will also serve as a member of the board
of directors. Senior management roles will be shared by executives from
both companies. Among these are: Westar’s current senior vice president
and chief financial officer (CFO), Tony Somma, will become executive
vice president and CFO. Kevin Bryant, current Great Plains Energy senior
vice president of finance and strategy and CFO will become executive
vice president and chief operating officer. Greg Greenwood, Westar’s
senior vice president of strategy, including regulatory affairs, will
become the new company’s executive vice president of strategy and chief
administrative officer, responsible for regulatory affairs and merger
savings, among other responsibilities.
The board of directors will consist of an equal number of directors
nominated from each company, including Bassham from the Great Plains
Energy board and Ruelle from the Westar Energy board. The lead
independent director will be Charles Q. Chandler, IV, currently Westar
Energy’s independent chairman of the board.
Financial and Strategic Benefits

Accretion in the first year after closing and thereafter: Great
Plains Energy and Westar Energy expect the merger to be accretive to
their respective standalone earnings per share in the first year after
closing and accretive thereafter.

A stronger platform for dividend growth: Upon closing, Westar
Energy shareholders will see an immediate dividend uplift of
approximately 15 percent and Great Plains Energy’s current dividend
will be maintained. The companies expect dividend growth in line with
earnings and a pro forma payout ratio of 60-70 percent.

Attractive, balanced total return for shareholders: The merger
will position the combined company to deliver top quartile total
shareholder returns with the company targeting compounded annual
earnings per share growth of 6-8 percent from 2016-2021. Significant
efficiencies available by combining utility operations should allow
both quantifiable benefits for customers and afford the utilities a
better opportunity to earn their allowed returns without having to
resort only to rate increases. The combined company expects to have a
strong balance sheet and improved free cash flows, thereby creating a
robust business platform to pursue new sustainable growth
opportunities including investments in additional renewables and
transmission assets. In addition, the combined company anticipates
implementing a share repurchase program after closing to rebalance the
company’s capital structure and effectively deploy cash.

Improved credit profile: With no transaction debt, the
companies expect that the combined company will have a strong balance
sheet and long-term credit metrics that support an improving
investment grade rating. Post close, the combined company and its
regulated utilities expect to maintain a financial profile consistent
with strong investment grade ratings of high BBB/Baa to A.

Increased scale and more diverse, sustainable generation portfolio: Once
the transaction is complete, the combined company will have nearly 1.6
million customers in Kansas and Missouri, nearly 13,000 megawatts of
generation capacity, almost 10,000 miles of transmission lines and
more than 51,000 miles of distribution lines. In addition, the company
will have one of the largest wind generation portfolios in the
country, representing nearly one third of its retail sales. Including
nuclear output, nearly half of the utility’s retail sales can be
produced with zero emissions.

Customer and Community Benefits

Significant cost savings, operating efficiencies and proactive cost
management: More than a year of integration planning has
identified significant operating efficiencies and cost savings.
Complementary and contiguous service territories, shared generation
assets and expanded footprint are expected to create cost savings and
net operating efficiencies of about $35-45 million in 2018, growing to
$140-170 million by 2021 and beyond.

An immediate rate credit for customers: The company will
provide a minimum of $50 million in total rate credits for all
customers upon the closing of the transaction. The credit, which
exceeds the expected net savings in 2018, will be given to customers
as a one-time reduction. It is an immediate up-front benefit to
customers, reflecting confidence in future operating efficiencies and
cost savings the company expects to achieve over time by combining
operations. Thereafter, cost savings resulting from the merger
efficiencies will benefit customers through the normal regulatory
process, which also will allow the combined company a better
opportunity to earn its authorized return without relying solely on
rate increases.

Commitment to maintaining strong customer service: This
transaction will create opportunities for the companies to leverage
their combined resources and stronger balance sheet to maintain
already strong customer service levels. In addition, the companies
will share best practices for customer service and reliability across
the combined customer bases.

Commitment to jobs and the community: The combined company has
committed that there will be no layoffs as a result of the
transaction. Any employee reductions related to the merger will be
accomplished through attrition and normal retirements from both Great
Plains Energy and Westar Energy. Following close, the company will
maintain a strong workforce across its operations. This includes
maintaining Westar Energy’s customer contact center in Wichita,
establishing new walk-in customer service centers in Wichita and
Topeka and maintaining operating headquarters in both Kansas City,
Missouri, and Topeka, Kansas. Corporate headquarters will remain in
Kansas City, Missouri. The company will maintain at least 500
employees in its downtown Topeka headquarters for at least five years
after the merger. Given vacancies and natural attrition, the company
expects to continue to recruit employees to Topeka to fill jobs. The
company will continue to invest corporate resources and employee
volunteer hours in its communities while maintaining current levels of
charitable giving.

Timing and Approvals
With the Kansas Corporation Commission’s (KCC) encouragement in its
order, the companies continue to work with Kansas regulatory staff and
the other parties. They will continue working directly with regulatory
staff in both Kansas and Missouri as well as other parties to gain
necessary approvals as expeditiously as possible. The transaction is
expected to close in the first half of 2018, subject to the satisfaction
of customary closing conditions, including approval by Great Plains
Energy’s shareholders and Westar Energy’s shareholders and the receipt
of regulatory approvals, including the Federal Energy Regulatory
Commission, the Missouri Public Service Commission, the KCC, the Nuclear
Regulatory Commission and clearance under the Hart-Scott-Rodino Act.
Advisors
Goldman Sachs & Co. LLC is serving as lead financial advisor to Great
Plains Energy. Barclays and Lazard are also serving as financial
advisors to Great Plains Energy. Bracewell LLP is serving as legal
advisor to Great Plains Energy.
Guggenheim Securities, LLC is serving as exclusive financial advisor and
Baker Botts L.L.P. is serving as legal advisor to Westar Energy.
Analyst Conference Call/Webcast
Great Plains Energy and Westar Energy will host a conference call today
at 9:00 a.m. ET / 8:00 a.m. CT to discuss this announcement.
A live audio webcast of the conference call and presentation slides will
be available on the investor relations pages of Great Plains Energy’s
website at www.greatplainsenergy.com
and Westar Energy’s website at www.WestarEnergy.com.
The webcast will be accessible only in a “listen-only” mode.
The conference call may be accessed by dialing 888-353-7071
(U.S./Canada) or 724-498-4416 (international) five to ten minutes prior
to the scheduled start time. The passcode is 52084743.
A replay and transcript of the call will be available on July 10, 2017,
by accessing the investor relations sections of the companies’ websites.
A telephonic replay of the conference call will also be available on
July 10, 2017, through July 17, 2017, by dialing 855-859-2056
(U.S./Canada) or 404-537-3406 (international). The passcode is 52084743.
About Great Plains Energy
Headquartered in Kansas City, Mo., Great Plains Energy Incorporated
(NYSE: GXP) is the holding company of Kansas City Power & Light Company
and KCP&L Greater Missouri Operations Company, two of the leading
regulated providers of electricity in the Midwest. Kansas City Power &
Light Company and KCP&L Greater Missouri Operations Company use KCP&L as
a brand name. More information about the companies is available on the
Internet at: www.greatplainsenergy.com
or www.kcpl.com.
About Westar Energy
As Kansas’ largest electric utility, Westar Energy, Inc. (NYSE:WR)
provides customers the safe, reliable electricity needed to power their
businesses and homes. Half the electricity supplied to the company’s
700,000 customers comes from emissions-free sources – nuclear, wind and
solar - with a third coming from renewables. Westar is a leader in
electric transmission in Kansas, coordinating a network of lines and
substations that support one of the largest consolidations of wind
energy in the nation. For more information about Westar Energy, visit www.WestarEnergy.com.
Forward-Looking Statements
Statements made in this communication that are not based on historical
facts are forward-looking, may involve risks and uncertainties, and are
intended to be as of the date when made. Forward-looking statements
include, but are not limited to, statements relating to the anticipated
merger transaction of Great Plains Energy Incorporated (Great Plains
Energy) and Westar Energy, Inc. (Westar Energy), including those that
relate to the expected financial and operational benefits of the merger
to the companies and their shareholders (including cost savings,
operational efficiencies and the impact of the anticipated merger on
earnings per share), the expected timing of closing, the outcome of
regulatory proceedings, cost estimates of capital projects, redemption
of Great Plains Energy debt and convertible preferred stock, dividend
growth, share repurchases, balance sheet and credit ratings, rebates to
customers, employee issues and other matters affecting future
operations. In connection with the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, Great Plains Energy and Westar
Energy are providing a number of important factors that could cause
actual results to differ materially from the provided forward-looking
information. These important factors include: future economic conditions
in regional, national and international markets and their effects on
sales, prices and costs; prices and availability of electricity in
regional and national wholesale markets; market perception of the energy
industry, Great Plains Energy and Westar Energy; changes in business
strategy, operations or development plans; the outcome of contract
negotiations for goods and services; effects of current or proposed
state and federal legislative and regulatory actions or developments,
including, but not limited to, deregulation, re-regulation and
restructuring of the electric utility industry; decisions of regulators
regarding rates that the companies can charge for electricity; adverse
changes in applicable laws, regulations, rules, principles or practices
governing tax, accounting and environmental matters including, but not
limited to, air and water quality; financial market conditions and
performance including, but not limited to, changes in interest rates and
credit spreads and in availability and cost of capital and the effects
on derivatives and hedges, nuclear decommissioning trust and pension
plan assets and costs; impairments of long-lived assets or goodwill;
credit ratings; inflation rates; effectiveness of risk management
policies and procedures and the ability of counterparties to satisfy
their contractual commitments; impact of terrorist acts, including, but
not limited to, cyber terrorism; ability to carry out marketing and
sales plans; weather conditions including, but not limited to,
weather-related damage and their effects on sales, prices and costs;
cost, availability, quality and deliverability of fuel; the inherent
uncertainties in estimating the effects of weather, economic conditions
and other factors on customer consumption and financial results; ability
to achieve generation goals and the occurrence and duration of planned
and unplanned generation outages; delays in the anticipated in-service
dates and cost increases of generation, transmission, distribution or
other projects; Great Plains Energy’s and Westar Energy’s ability to
successfully manage and integrate their respective transmission joint
ventures; the inherent risks associated with the ownership and operation
of a nuclear facility including, but not limited to, environmental,
health, safety, regulatory and financial risks; workforce risks,
including, but not limited to, increased costs of retirement, health
care and other benefits; the ability of Great Plains Energy and Westar
Energy to obtain the regulatory and shareholder approvals necessary to
complete the anticipated merger or the imposition of adverse conditions
or costs in connection with obtaining regulatory approvals; the risk
that a condition to the closing of the anticipated merger may not be
satisfied or that the anticipated merger may fail to close; the outcome
of any legal proceedings, regulatory proceedings or enforcement matters
that may be instituted relating to the anticipated merger; the costs
incurred to consummate the anticipated merger; the possibility that the
expected value creation from the anticipated merger will not be
realized, or will not be realized within the expected time period;
difficulties related to the integration of the two companies; the credit
ratings of the combined company following the anticipated merger;
disruption from the anticipated merger making it more difficult to
maintain relationships with customers, employees, regulators or
suppliers; the diversion of management time and attention on the
anticipated merger; and other risks and uncertainties.
This list of factors is not all-inclusive because it is not possible to
predict all factors. Additional risks and uncertainties will be
discussed in the joint proxy statement/prospectus and other materials
that Great Plains Energy, Westar Energy and Monarch Energy Holding, Inc.
(Monarch Energy) will file with the Securities and Exchange Commission
(SEC) in connection with the anticipated merger. Other risk factors are
detailed from time to time in quarterly reports on Form 10-Q and annual
reports on Form 10-K filed by Great Plains Energy, KCP&L and Westar
Energy with the SEC. Each forward-looking statement speaks only as of
the date of the particular statement. Monarch Energy, Great Plains
Energy, KCP&L and Westar Energy undertake no obligation to publicly
update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any
proxy, vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities
laws of any such jurisdiction. In connection with the proposed merger,
Monarch Energy will file a Registration Statement on Form S-4, that
includes a joint proxy statement of Great Plains Energy and Westar
Energy, which also constitutes a prospectus of Monarch Energy. WE URGE
INVESTORS TO READ THE REGISTRATION STATEMENT AND JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED BY MONARCH ENERGY, GREAT
PLAINS ENERGY AND WESTAR ENERGY WITH THE SEC CAREFULLY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT GREAT
PLAINS ENERGY, WESTAR ENERGY, MONARCH ENERGY AND THE PROPOSED MERGER.
Investors will be able to obtain free copies of the registration
statement and joint proxy statement/prospectus when available and other
documents filed by Monarch Energy, Great Plains Energy and Westar Energy
with the SEC at http://www.sec.gov,
the SEC’s website, or free of charge from Great Plains Energy’s website (http://www.greatplainsenergy.com)
under the tab, “Investor Relations” and then under the heading “SEC
Filings.” These documents are also available free of charge from Westar
Energy’s website (http://www.westarenergy.com/)
under the tab “Investors” and then under the heading “SEC Filings.”
Participants in Proxy Solicitation
Great Plains Energy, Westar Energy and their respective directors and
certain of their executive officers and employees may be deemed, under
SEC rules, to be participants in the solicitation of proxies from Great
Plains Energy’s and Westar Energy’s shareholders with respect to the
proposed merger. Information regarding the officers and directors of
Great Plains Energy is included in its definitive proxy statement for
its 2017 annual meeting filed with SEC on March 23, 2017. Information
regarding the officers and directors of Westar Energy is included in an
amendment to its Annual Report on Form 10-K for the fiscal year ended
December 31, 2016, filed with the SEC on April 28, 2017. Additional
information regarding the identity of potential participants, and their
direct or indirect interests, by securities, holdings or otherwise, will
be set forth in the registration statement and joint proxy
statement/prospectus and other materials filed with SEC in connection
with the proposed merger. Free copies of these documents may be obtained
as described in the paragraphs above.

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